US core CPI missed estimates with 0.1% MoM and 3.3% YoY. Headline data slipped as well. Gold and stocks are partying, the US Dollar is down. Chances of a rate cut in September have substantially increased. Live coverage
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Why CPI inflation matters for markets
Will the CPI report to officials at the Federal Reserve (Fed) the confidence they need to cut interest rates? That is what markets hope for, as the US economy slows down. Bonds point to the first cut coming in September,
The most important figure is core CPI MoM, which excludes volatile energy and food products on which the Fed has little impact. Any change of 0.1% matters.
A 0.1% read would boost stocks and Gold, while weighing on the US Dollar. A hot 0.3% print would depress the precious metal and equities, lifting the Greenback.
A 0.2% outcome is expected, and that would still be a positive development. It would reflect an annualized rise of roughly 2.5%, close to the Fed's 2% target. The YoY figure is still above 3%.
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